In today’s complex financial landscape, ensuring consumer protection and promoting financial literacy are crucial cornerstones of a fair and just society.
In Issue 1 of the FAIS Ombud’s Newsletter, the FAIS Ombud committed their office to empowering consumers and safeguarding their rights in the financial sphere by actively working towards enhancing awareness and advocating for consumer rights, focusing on the promotion of financial literacy and increasing consumer awareness.
Recent efforts have seen the FAIS Ombud’s involvement in a financial health and wellness initiative that arose from a concerning trend observed among employees unknowingly acquiring multiple funeral insurance policies that led to reduced take-home pay. In some cases, individuals were prompted to seek financial assistance from micro-lenders.
A root cause analysis revealed that some employees had signed blank contracts, enabling the creation of multiple contracts without their explicit consent. A finding which indicates a clear breach of the FAIS General Code of Conduct (GCOC) pertaining to section 7(1)d in terms of the completion of transaction requirements and documentation, section 8 requirements for gathering information and establishing suitability, and section 21 in terms of waiver of rights – for which representatives are often debarred, as was the finding in the case study of T v C, discussed in the report. This resulted in ignoring a critical step of information gathering and conducting a needs analysis to ensure clients receive appropriate advice and a product that suits their needs, leading to several instances where clients had accepted unnecessary and burdensome insurance policies, even when there was no insurable interest in the life insured. In response to these challenges, the FAIS Ombud collaborated with the organisation to conduct informative financial health and wellness sessions which were designed to educate employees on a spectrum of financial matters, stressing the importance of consumer awareness, individual rights, and responsible financial decision-making.
The report further discussed a formal complaint lodged with the FAIS Ombud’s office where the Complainant had noticed a significant increase in their investment savings plan amount being deducted from their salary without their consent. It was discovered that additional life cover and a funeral plan were added to the client’s profile. The FAIS Ombud investigated the matter and facilitated a successful refund of all wrongfully deducted premiums and stated that FSPs need to, at the inception of the sale, disclose all relevant information to ensure that the client is aware of what product he is purchasing , the premiums and the proper consents are in place. Had the proper protocols and processes been followed by the FSP, this would have been done and the complainant would not have to lodge a complaint.
FSPs are reminded of their obligation to champion client’s rights and to financial empower clients.
New FAIS Website unveiled
The FAIS Ombud recently unveiled an enhanced website, introducing a user-friendly Complaints Portal that facilitates swift and efficient complaint submissions and tracking for various financial products and services. Key features of the revamped website include the dedicated Complaints Portal, a call for user feedback through a brief survey, and an Advice Corner providing crucial information for making informed decisions about financial products.
The FAIS Ombud’s efforts aim to empower consumers by providing a seamless and informative experience. The emphasis lies not only on consumer feedback but also on offering valuable guidance for informed choices regarding various financial products and services.
FSP should, in line with the requirements of a Complains Management Frameworks in terms of section 17(4) of the GCOC , adopt the FAIS Ombuds approach and analyse complaints and other business information to ensure that services and advice consider and enhance their customer experience to enable informed decision-making and prevent unnecessary referrals to the FAIS office in the form of complaints.